Matt McCarten: Time to fight for a fairer tax system for all Kiwis

Phil Goff needs to step up and take on this tax fight. Photo / Mark Mitchell

John Key made a pragmatic political call at the start of the recession to not take an axe to public services.

The Prime Minister chose instead to borrow a billion dollars a month to pay the Government's bills. It was the correct decision and has kept confidence high and helped us weather the economic troubles far better than almost every other country.

However, it was only a matter of time before Key would have to work out how to pay the bills. I'm not a conspiracy theorist, but I don't underestimate those who decide political strategy either.

It seems just too much of a coincidence that National and Act set up a task force, headed by Don Brash and loaded up with well-known, hard-right-wingers, that came out recently calling for the slashing of Government services, wholesale sell-off of public assets, slashing taxes for the wealthy and increasing GST.

And just in case we misunderstood whose interests they served, they advocated the effective abolition of the minimum wage. Brash's findings were rightly widely panned.

But if the real objective was to soften us up for some of his less scary ideas then it was brilliant.

How else do you explain the Government's tax working group coming up with cuts to the top personal tax rate and company's profits with nothing for low and middle-income earners without a mass outcry? Key and Bill English have tentatively started talking about an additional 2.5 per cent GST being added to everything we buy.

If we believe polls half of New Zealanders think it's okay. Amazing! The rich must be pinching themselves with delight.

We need our public services . The most efficient and fairest way to pay for them is through taxes.

Our country has an appalling tax system that needs overhauling. But not for the same reasons that our rulers think. Too much of our public funding comes from wage and salary earners and regressive taxes such as GST that disadvantage the poor.

Why is there not a capital gains tax? Almost every other developed country has it except us. Why should someone make $100,000 profit from a property sale and not be taxed, yet a small business owner is taxed a third on their $100,000 profit? Why isn't there a land or a property tax so owners have to think about making them productive rather than leave them idle? Our current tax system favours passive investments rather than supports innovation.

Why aren't there death duties? It's not like you can take your wealth with you. Surely it's better to pay less tax when you're building your wealth and pay a large chunk on what's there when you die?

If you are rich you should be teaching your kids to earn their own living than waiting to bludge off you when you die.

GST is a cynical flat tax gathering method that hurts the poor and middle-income people who spend everything they earn just to live. It's also inefficient and costs businesses money and time to be the Government's tax collectors.

Money experts around the world know the most efficient and cost effective way to collect indirect taxes is through the banking system. If there was a financial transaction tax of just 10c on every $100 (one tenth of one per cent) that went through the bank system, it would raise a similar amount as GST.

Most of us wouldn't even notice it. But those who buy big-ticket items would. That's why the ruling class won't do it.

Interestingly the Bankers Association in the mid-80s advocated this tax as fairer and more efficient than GST. There is growing world-wide support for this tax, yet the so-called tax working group didn't even mention it.

Twenty-five years ago we were told that if we cut taxes for the rich and raised taxes on the poor then we would work harder and earn more. It was nonsense then. It's nonsense now. This is your moment Phil Goff to step up and take on this fight.